State Farm, Allstate, and Other Insurers Face Criticism Amid Devastating California Wildfires for Cutting Coverage

Deadly wildfires in Southern California have destroyed over 1,000 homes and claimed at least five lives this week, intensifying scrutiny over major insurance companies’ recent decisions to scale back policies in the state. The Palisades Fire and Eaton Fire have burned nearly 30,000 acres in Los Angeles County, forcing 130,000 residents to evacuate amid strong Santa Ana winds.

The fires have drawn attention to a growing insurance crisis in California. In recent years, major insurers such as State Farm, Allstate, Farmers, and USAA have reduced or entirely stopped offering new home insurance policies in wildfire-prone areas. These moves, driven by escalating wildfire risks, regulatory constraints, and soaring costs, have left many Californians without coverage during disasters like this week’s wildfires.

State Farm, California’s largest home insurance provider, announced in March 2024 that it would not renew 72,000 existing policies starting in the summer. The company cited inflation, regulatory costs, and the growing frequency of natural disasters like wildfires as key reasons for its decision. State Farm had previously stopped accepting new applications for coverage in the state. Other leading insurers, including Allstate and Farmers, have also scaled back new policy offerings in California, citing similar concerns. Rising repair costs, reinsurance premiums, and what insurers view as insufficient rates approved by state regulators have further complicated their ability to operate in the state.

A State Farm spokesperson addressed the wildfires in a statement to FOX Business, saying, “Our number one priority right now is the safety of our customers, agents, and employees impacted by the fires and assisting our customers in the midst of this tragedy.”

The wildfires have prompted high-profile criticism from residents and prominent figures in the entertainment industry. Actor James Woods, who owns a home in Pacific Palisades, wrote on X (formerly Twitter) that an insurance company canceled all policies in his neighborhood just months ago. Actor Rob Schneider directly called out State Farm in a fiery post on X, saying, “Screw you and all your phony commercials!! You are a pile of crap for canceling insurance policies of Californians! I will never use State Farm insurance ever again!”

The issue of insurance in high-risk areas has long been a contentious one in California. Insurers argue that the state’s regulatory environment, coupled with increasing wildfire risks, makes it unsustainable to offer affordable policies. However, critics contend that the withdrawal of coverage leaves homeowners vulnerable during disasters.